Has Deleveraging in the US Come to an End?

After five years of nearly uninterrupted deleveraging, are American consumers (with a little help from lenders) ready to reverse course and begin taking on more debt? According to our latest quarterly survey of US bank risk professionals, the answer seems to be yes.

A large majority (61%) of the 251 bankers polled expect consumers will be applying for more new credit and trying to bump up the limits on existing credit accounts over the next six months. These are the highest figures we’ve seen during the 11 quarters we’ve been conducting this survey. In addition, 59% of respondents expect credit card balances to increase. That's the second-highest figure we’ve seen in our survey.

If these expectations prove correct, then 2013 could be the first year in which Americans increase their reliance on credit and debt since the Great Recession of 2008-09.

Of course, consumers’ desire to borrow more is only half of the equation. The other half is whether sufficient credit will be available to satisfy consumer appetite. And according to our survey, the answer to that query is also yes:

The majority of survey respondents anticipate an ample credit supply over the next six months, expecting to meet or exceed consumer demand for all loan types. As was the case last quarter, our survey results indicate that bankers believe credit availability for new mortgages and small business loans will be more limited than for other types of loans.

Despite the results pointing towards an end of deleveraging, the survey found that most bankers would like to see consumers remain cautious with their finances. Over 70 percent of those polled believe consumers should either save their money or pay off debts. Here’s the breakdown of the responses: